Awareness of the environmental and social impact caused by businesses and consumers has led to the spread of innovative, environmentally and socially conscious business models. From the classic Business Model Canvas, multiple alternative versions have emerged to visually represent these new business models. One of these is the Social Business Model Canvas.
What is the Business Model Canvas?
The Business Model Canvas was devised by Alex Osterwalder in 2004 as a strategic tool to design and develop business models. It provides a visual representation of the business model, describing how the organisation creates, distributes and acquires value.
Why is it useful? Because, if you don’t know how you’re creating value, you probably don’t know your business thoroughly and can’t have confidence that the business will be sustainable in the long run. Because of the visual language, this “canvas” allows you to understand the pillars of your model and its complex key components. This makes it easier to visualise the gaps to be filled and the questions to be answered to limit the occurrence of unforeseen events as much as possible.
The original Business Model Canvas consists of 9 distinct sections, representing the 9 elements that make up a business. The more the individual pieces are connected, the more they are self-reinforcing, making the business model coherent and aligned.
The 9 sections
- Customer Segment: the customer segments that the organisation caters to.
- Value Proposition: the value the company offers customers through its products and/or services.
- Channels: the channels of distribution and communication to connect with your target audience
- Customer Relations: the type of relationships the company establishes with its customers
- Revenue Stream: the sources of revenue generated from the sale of products and/or services
- Key Resources: the material and non-material resources needed for the business model (and thus the company) to function
- Key Activities: all those activities that are needed to start and run the business
- Key Partners: suppliers, distributors, other partners with whom the company can form collaborations
- Cost Structure: all the different types of costs that the company will incur.
Over the years, countless alternative versions of the original Business Model Canvas have spread, hand in hand with the emergence of innovative business models that want to cope with changes, new needs and heightened awareness, including an awareness of human impact on society and the environment.
What is the Social Business Model Canvas?
Among the new formulations of Alex Osterwalder’s model is the Social Business Model Canvas, created to depict the structure of business models defined as Social. These are models adopted by those companies that, while for-profit, want to generate social value in addition to economic value. Let us try to explain further.
We often talk about Corporate Social Responsibility (CSR), which translates into the willingness of companies to take action on social, environmental and ethical issues, not only internally but also externally. Social responsibility becomes an integral part of the way they operate, but without neglecting profit. Have you ever heard of ESG (Environment, Social and Governance) principles? Innovating your industry based on these principles means innovating with respect for the environment, society and the workforce.
To map and visually represent the Social Business Model, we can expand the classic Canvas by adding two sections on the positive and negative impact of the company on society and the environment.
- Social and environmental benefits: what is the value generated by the organisation for society and the environment? For example, ensuring a better quality of life for disadvantaged people, safeguarding the environment by using eco-friendly materials, helping the development of local communities, etc.? Who are the beneficiaries?
- Social and environmental costs: what side effects does the business activity cause to society and the environment? How can you measure this and what can you do to prevent or reduce impact?
The model seeks to strike a balance by minimising negative social and environmental impact and maximising benefits. The goal is to create and sell a product or service that provides value to the individual consumer and society at the same time.
Social Business Model: examples of ethical and sustainable brands
An example of a company adopting the Social Business Model might be a shoe company that plants a tree for every pair sold, or a cosmetics brand that supports a network of small local farming communities by purchasing raw materials from them.
There are an increasing number of brands in the field of sustainable fashion based on the concept of upcycling, the innovative model that starts from used garments, textile scraps and other unwanted clothes to give them new life as unique pieces.
Appcycled, for example, is an Italian marketplace where experienced designers reinvent textile remnants creating handcrafted and individual pieces. Atotus is a circular economy project that connects the entire sustainable fashion supply chain (spinners, weavers and clothing brands). Also in line with the concept of upcycling is Must Had, another re-fashion platform that sells clothing and accessories to promote and give visibility to brands and fashion designers who embody the philosophy of ‘reuse’.
All these brands contribute to creating a real community of responsible producers and conscious consumers who believe in sustainable and ethical fashion.
We could go on to cite so many more examples and not just in the fashion industry, of course! Konobooks, a lifestyle and stationery brand, makes its KW1 line with paper produced from industrial Kiwi waste. In addition, the brand set a goal of planting at least 100 trees by 2022 with the help of other companies already doing this kind of activity in sensitive areas of the planet. Shop for Gea, on the other hand, is the first plastic-free cosmetics platform in Italy and collaborates only with companies that follow the principles of short supply chain and those of fair trade. Fair trade aims at guaranteeing fair pay for producers and its employees while ensuring environmental protection.
The Social Business Model and the Value Pyramid.
We are increasingly careful and conscious consumers regarding our purchases and habits. We focus not only on the product or service itself, but also on the conduct of the company that produces or provides it.
Bain & Company, a strategy consulting firm, was inspired by Maslow’s Pyramid of Needs to devise a new Pyramid of Value that is more current and in step with the times. This pyramid lists the 30 elements of value to consumers, which translate into their needs. The more a product or service succeeds in satisfying them, the greater the value of that product or service perceived by the customer.
The 30 elements are divided into four categories of values: functional (such as simplifying activities or saving time), emotional (such as well-being, reducing anxiety, fun, etc.), life-changing (such as motivation, self-actualisation, sense of belonging) and, right at the top of the pyramid, there is social impact, or going beyond oneself to care for the ecosystem of which one is a part.
In essence, moving toward sustainable and more responsible choices can enable the company to achieve a twofold goal: to impact the community and the environment (in which it operates) in a positive way while at the same time gaining the trust of target customers. This triggers a virtuous circle that makes the organisation even stronger and more credible.
What, then, is the Social Business Model Canvas for? It serves to give you a hand in getting clarity about your Social Business Model and to answer your doubts, even the ones you may not have thought you had. Can the business stand? Is it profitable, in addition to being mindful of social impact? Are the 11 blocks of the Canvas interconnected? Can my business really generate dual value?